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In these economic times, more and more people finding themselves being incarcerated due to debts. Consider the following quote when debating the 13th amendment, many in Congress were not thinking of slaves, but rather white labor, with Senator Henry Wilson saying,

“The same influences that go to keep down and crush down the rights of the poor black man bear down and oppress the poor white laboring man.”

When the US brought in the 13th amendment many thought this was to abolish slavery, but it did leave an exceptional circumstance

“neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.”

So in the case someone has been convicted, slavery and involuntary servitude are legal.

Normally a country in debt crisis would devalue its currency, suffer short-term pain and then reap the rewards of instantly being cheaper. Although in the case of Greece which doesn’t have a strong export industry it would still have a massive benefit if it was to leave the euro. In the case of Iceland, it successfully devalued and is growing its economy again, although it has mainly escaped the attentions of the presstitutes. There you have it, the MSM and EUssr does not want Iceland’s success story to be told for the same reason it doesn’t want Greece to leave the euro, because it knows this is the correct way to handle the debt crisis and other countries would want to follow.

The elites of the EUssr are desperate for Greece to remain with the euro because its eventual successful recovery with a new currency with cause the euro to collapse. Consider the following article on FT from Arvind Subramanian (a Senior Fellow at the Peter G. Peterson Institute for International Economics, which counts amongst its directors numerous influential Bilderberg members, including former Federal Reserve chairman Paul Volcker, former United States Treasury Secretary Lawrence Summers, and Bilderberg kingpin David Rockefeller). Someone is scared!!!

Expelled from the eurozone, Greece might prove more dangerous to the system than it ever was inside it – by providing a model of successful recovery.

There is an overlooked scenario in which default is not a disaster for Greece. If this is the case, the real, more existential threat to the eurozone might be a very different one, in which the Greeks have the last laugh. Consider that scenario.

The immediate consequences of Greece leaving or being forced out of the eurozone would certainly be devastating. Capital flight would intensify, fuelling depreciation and inflation. All existing contracts would need to be redenominated and renegotiated, creating financial chaos. Perhaps most politically devastating, fiscal austerity might actually need to intensify, since Greece still runs a primary deficit, which it would have to correct if EU and International Monetary Fund financing vanished.

But this process would also produce a substantially depreciated exchange rate (50 drachmas to the euro, anyone?) And that would set in motion a process of adjustment that would soon reorientate the economy and put it on a path of sustainable growth. In fact, Greek growth would probably surge, possibly for a prolonged period, if it adopted sensible policies to restore rapidly and sustain macroeconomic stability.

Examples of successful devaluations

What is the evidence? Just look at what happened to the countries that defaulted and devalued during the financial crises of the 1990s. They all initially suffered severe contractions. But the recessions lasted only one or two years. Then came the rebound. South Korea posted nine years of growth averaging nearly 6 per cent. Indonesia, which experienced a wave of defaults that toppled nearly every bank in the entire system, registered growth above 5 per cent for a similar period; Argentina close to 8 per cent; and Russia above 7 per cent. The historical record shows clearly that there is life after financial crises.

This would also be true in Greece, even allowing for the particularities of its situation. Greece’s low export-to-GDP ratio is often said to preclude the possibility of high export-led growth. But that argument is not ironclad because crises can lead to dramatic reorientations of the economy. India, for example, managed to double its similarly low export-to-GDP ratio within a decade after its crisis in 1991, and doubled it again in the following decade even without a big currency depreciation.

To put in context, Greece’s successful potential exit from the euro could have massive ramifications. Germany may have to concede way more ground to hang on to its free lunch.

Suppose that by mid-2013 Greece’s economy is recovering, while the rest of the eurozone remains in recession. The effect on austerity-addled Spain, Portugal and even Italy would be powerful. Voters there would not fail to notice the improving condition of their hitherto scorned Greek neighbour. They would start to ask why their own governments should not follow the Greek path and voice a preference for leaving the eurozone. In other words, the Greek experience could fundamentally alter the incentives for these countries to remain in the eurozone, especially if economic conditions remained grim.

At this stage, politics in Germany would also be affected. Today, Germany grudgingly does the minimum needed to keep the eurozone intact. If exit to emulate Greece becomes an attractive proposition, Germany will be put on the spot – and the magnanimity it shows in place of its current miserliness will be the ultimate test of how much it values the eurozone. The answer might prove surprising. The German public might suddenly realise that the eurozone confers on Germany not one but two “exorbitant privileges”: low interest rates as the haven for European capital and a competitive exchange rate by being hitched to weaker partners. In that case, Germany would have to offer its partners a much more attractive deal to keep them in the eurozone.

Such a scenario would be rich in irony. Greece is viewed as the pariah polluting the eurozone; its expulsion might make it a far bigger threat to the single currency’s survival. If a eurozone exit creates the conditions for a rebound in Greece, it may prove an infectious model. The ongoing Greek tragedy could yet turn out not too badly for the Greeks. But tragedy it might well be for the eurozone and perhaps for the European project.

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In recent weeks we heard stories of deposits being pulled in Greece, now the contagion has spread to Spain. The ECB has stated that private investors and companies are withdrawing from Spanish financial institutions at the worst possible time. Having to cope with bailing out Bankia and rumours of other banks needing funding, stock market falling, bonds rates reaching 7% and todays downgrade of 8 autonomous regions, this is going to hit Rajoy how is already struggling to keep Spain from needing a bailout. The inevitable most happen.

Investors are fleeing Spain as the financial crisis worsens while Madrid battles to contain fears of an economic collapse.

The European Central Bank said on Wednesday that private individuals and companies are withdrawing their money out of Spanish Banks. Data shows private deposits at Spain’s financial institutions fell by more than 30 percent in April. The interest rate on Spain’s 10-year bonds rose to 6.703 percent as the country battled to avoid being the next victim of the eurozone crisis. Stock prices fell all over the world and Madrid’s IBEX-35 index slumped 2.58 percent to a nine-year low at 6,090.4 points. The euro slumped to a two-year low versus the US dollar amid fears that Spain could be forced into asking for a bailout for its ailing banks.

………

Also on Wednesday, the European Commission said Spain is on top of the list of the eurozone 12 critical economies due to the countries’ deepening financial crisis.

Spain’s central bank reported on Tuesday that Spain’s economy would shrink in the second quarter of 2012, with the recession expected to continue until at least mid-2012.

Battered by the global financial downturn, the Spanish economy collapsed into recession in the second half of 2008, taking with it millions of jobs.

The worsening eurozone debt crisis has raised Spain’s financing costs and raised concerns that the country might have to seek a European Union bailout, like Greece.